How Shriram Finance streamlined its organization structure and outperformed the market

Subscribe to enjoy similar stories. Shriram Finance has recently been in the news for all the right reasons. One, its fund-raising plans.

After raising $1.3 billion in December, the highest offshore funding ever raised by a private Indian NBFC (non-banking financial company), the truck financier is in discussions with banks for another $250 million in offshore loans to fuel growth. Two, the lender is setting the stage to increase its share of the fast-growing EV financing pie. Three, the Piramal group is set to offload its stake in Shriram’s insurance businesses.

Why this is a good thing, will become clearer in the next section. Four, lenders received a boost from the regulator last week when the Reserve Bank of India (RBI) rolled back the increase in risk-weights for loans to NBFCs. This is expected to bring down the cost of funding for non-bank finance companies at a time when the stress in unsecured retail lending has been dragging down profits.

Following these developments, the stock of Shriram Finance has appreciated more than 8% in just three days. To be sure, the outperformance seen in the last few days is an exaggerated extension of the market-beating performance delivered since 2023, when Piramal Enterprises exited from Shriram Finance. Established half a century ago, this Chennai-headquartered financial conglomerate is engaged in the full spectrum of financial services—investing, lending, insurance, and, more recently, asset reconstruction.

Shriram Capital, which is jointly owned by Shriram Ownership Trust and South Africa-based Sanlam, is the holding company for the Shriram group. However, its organizational structure used to be much more complicated. Back in 2013, Piramal Enterprises purchased stakes in